Saturday, November 9, 2013

(Related Update 2): Cronyism: Big Sugar style

Related update 2:  Writing at Cato-@-Liberty, Chris Edwards reports that the politicans are currently working on a farm bill that may be passed by the end of the year.  Part of that massive program of corporate welfare involves the sugar industry.   Edwards's post is worthwhile because he provides specific ways in which Big Sugar will benefit from the current farm bill, including:
  • Guaranteed Prices. The Department of Agriculture runs a complex loan program to support sugar prices. Essentially, the government promises to buy sugar from processors at a set price per pound. Processors can sell to the government, or they can sell in the marketplace if the (manipulated) market price is higher.
  • Trade Restrictions. Complex import barriers called “tariff rate quotas” help to maintain high domestic sugar prices. Imports are restricted to about one quarter of the U.S. market, and each foreign country (except Mexico) is allocated a particular share of imports.
There's much more of interest in the article, available here.

Related Update:  Here's an update on the Big Sugar scam, also from Mark Perry.  In his most recent post, he links to a report from agriculture consulting firm Agralytica that includes this annoying assessment:
US sugar prices rose to record levels during the first four years of the 2008 bill. The extra cost to consumers averaged $3.7 billion per year. To date, prices have averaged 46 cents per pound compared to 28 cents under the 2002 farm bill. Consequently, employment in sugar-using food and beverage industries (which compete against imported products made with cheaper world- market sugar) has continued to decline, with nearly 127,000 jobs lost since 1997.

Original Post: Americans have been paying more in sugar and sugar-related products than they should for at least the last 30 years.  At its core, it's just a plan old example of protectionism designed to benefit a specific collection of individuals -- in this case, the US sugar industry and, ultimately, the corrupt politicians and bureaucrats that support it -- while putting the cost onto the consumer.  In this article the irreplaceable Mark Perry looks into the situation and shows how Big Sugar took the American public for a sweet $3 Billion -- and that was just last year!  But it should be noted that protectionist policies of this sort don't just hurt consumers, they also hurt other industries.  Perry quotes Larry Graham, President of the National Confectioners Association:
“The [US sugar] program creates a competitive advantage for foreign confectioners who pay a significantly lower world price for sugar and import their products into the US market. The tight market generated by these policies threatens the overall supply, jeopardizing smaller US companies and putting jobs at risk. Over the last 10 years the sugar program has eliminated more than 14,000 confectionery jobs and more than 75,000 food manufacturing jobs.” (Emphasis Marc Street)
Definitely worth checking out.